The statement comes after the ruling military announced it had appointed Aung Kyi, a deputy minister and retired general, to co-ordinate contacts and build "smooth relations" with the detained 62-year-old democracy leader.

Last week Than Shwe, the top general in the government, said he was prepared to hold talks with Aung San Suu Kyi, but that she must first renounce her calls for international sanctions against the government.

Responding to the appointment of Aung Kyi as a liaison, the NLD said that finding a solution through talks was "the natural way to help the people and the country."

But it added: "There are no preconditions if they really want to solve the problems through dialogue."

Aung Kyi's appointment was the latest in a series of small gestures apparently aimed at forestalling any punitive international moves as members of the UN Security Council debate what action to take against the generals.

The military crushed anti-government protests led by monks last month and said 10 people were killed, but foreign governments and dissident groups have said the toll is much higher.

Over the weekend, state media announced that nearly half of the more than 2,100 people the government has admitted arresting during the protests, and said the military had donated thousands of dollars as well as food and medicines to monasteries.

On Tuesday however, the New Light of Myanmar newspaper, widely regarded as a government mouthpiece, said nearly 1,000 people still being held over the protests could face jail sentences.

It also accused pro-democracy protesters of derailing the economy of the impoverished nation, saying the mass rallies "made the people poorer" because restaurants and shops had to be closed.

UN statement

The military says nearly 1,000 people still being held face jail sentences [AP]

At the United Nations meanwhile diplomats have been finalising a watered-down statement in reaction to the crackdown in Myanmar.

On Tuesday the US ambassador to the UN conceded that the ruling military would continue to play a role in Myanmar's future even as he said it was time to prepare for a government transition.

"The military, as a national institution, has its role to play in the transition and post-transition but it's very important that a serious dialogue on transition begins and that the international community, regional players, play their roles," Zalmay Khalilzad said.

His comments came as Western powers circulated to the UN Security Council's 15 members a revised version of a proposed statement on the crushing of protests in Myanmar that was first drafted on Friday.

Although lacking the legally binding weight of a resolution, the UN statement would still mark the first time the council, including China, has focused public pressure on the ruling generals.

The softer statement "strongly deplored" the repression of demonstrators instead of "condemning" it, and a paragraph demanding a full account of those jailed, missing or killed was removed.

But it still called for the release of political detainees, including Aung San Suu Kyi, and a dialogue between the military and the opposition.

Western diplomats said the council members would look at the new version on Wednesday.

Myanmar's ally China, which has used its veto to block previous council action on Myanmar, led the drive to soften the statement, saying any UN move should be "prudent and responsible" and not involve sanctions.